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Recently, GlaxoSmithKline (GSK - Analyst Report) received encouraging news with the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) recommending the approval of two of its oncology drugs, Tafinlar and Tyverb.
The CHMP recommended the approval of Tafinlar for BRAF V600E mutation-positive unresectable or metastatic melanoma patients. We note that the US Food and Drug Administration (FDA) approved Tafinlar for the above mentioned indication in May 2013. However, Tafinlar was not recommended by the FDA for patients suffering from wild-type BRAF melanoma. The FDA also cited several warnings and precautions related to the use of Tafinlar, which can lead to fatal side effects including increasing the risk of developing new primary cutaneous malignancies.
Glaxo intends to launch the drug in the US by early third quarter 2013. Currently approved melanoma drugs include Roche’s (RHHBY) Zelboraf and Bristol-Myers Squibb Co.’s (BMY - Analyst Report) Yervoy.
Meanwhile, the CHMP also recommended the approval of Tyverb in combination with Roche’s Herceptin (trastuzumab) for the treatment of patients with metastatic human epidermal growth factor receptor 2 (HER2) positive breast cancer who have received prior Herceptin therapy.
We note that Glaxo submitted the marketing application for Tyverb in the EU and the US (US trade name: Tykerb) in Feb 2012. However, in July, Glaxo withdrew the marketing application for Tykerb from the FDA. The decision to withdraw the application was taken after the FDA raised issues regarding the use of Tykerb, which Glaxo was unable to address with currently available data.
Tykerb is currently approved in combination with Roche’s Xeloda for treating patients suffering from advanced or metastatic HER2 positive breast cancer who have received prior therapy including an anthracycline, a taxane, and Herceptin. It is also approved in combination with Femara (letrozole) for postmenopausal women with hormone receptor positive metastatic breast cancer that overexpresses the HER2 receptor.
Glaxo currently holds a Zacks Rank #3 (Hold). The biggest near-term challenge for Glaxo will be to replace the revenues that will be lost to generic competition. Products like Valtrex, Lamictal, Imitrex, Requip, Combivir and Epivir are already facing declining sales due to intense generic competition. Going forward, a major part of Glaxo’s revenues will be exposed to generic competition as products like Pandemrix and Prepandrix are all scheduled to lose exclusivity in the next few quarters.
We believe that the pipeline at Glaxo must deliver to counter the generic threat. We are impressed by Glaxo’s growth-by-acquisition strategy to combat the loss of revenues due to genericization of key products.
Companies that currently look more attractive include Novo Nordisk (NVO - Analyst Report) carrying a Zacks Rank #2 (Buy).